Calgary-based Enbridge Inc. ENB-T is joining forces with I Squared Capital and pipeline firms WhiteWater and MPLX MPLX-N to connect natural gas supplies from the Permian Basin to the U.S. Gulf Coast.
The joint venture, announced Tuesday, underscores Enbridge’s focus on various markets south of the border – particularly as Canadian liquefied natural gas projects face delays while global appetite for the fuel continues to grow. Enbridge will have a 19-per-cent stake in the new venture, WhiteWater and I Squared a combined 50.6-per-cent stake, while MPLX will hold 30.4 per cent. The transaction is expected to close in the second quarter of 2024.
The venture will include a 100-per-cent interest in Enbridge’s Rio Bravo pipeline, which connects to NextDecade’s Rio Grande LNG project in Brownsville, Tex., and the Whistler pipeline, which transports natural gas from the Permian to Agua Dulce, Tex., near the starting point of the Rio Bravo pipeline. It will also have a 70-per-cent interest in the proposed ADCC pipeline, which would connect to Cheniere Energy’s LNG-N Corpus Christi LNG export facility, and a 50-per-cent interest in the Waha Gas Storage facilities.
A Scotiabank research note Tuesday said the joint venture would extend the reach of Enbridge’s natural gas infrastructure into the Permian and, in the longer term, “could yield future growth opportunities.”
Since Enbridge chief executive officer Greg Ebel took the reins last year, the company’s focus has shifted from pumping oil across the continent to becoming an energy infrastructure giant that operates in multiple sectors.
In September, for example, Enbridge set out to become North America’s largest natural gas distributor by spending US$9.4-billion to acquire three gas utilities with facilities in Ohio, North Carolina, Utah, Idaho and Wyoming. If the deal closes as expected this year, Enbridge will move 20 per cent of all the natural gas consumed in the U.S.
Mr. Ebel’s move to reorient Enbridge toward natural gas is a bet that the fuel will play a crucial role in the world’s lower-carbon energy future, and the company has disclosed plans to expand its capacity into the Permian, which is the largest shale oil patch in the U.S.
The U.S. was the world’s largest exporter of liquefied natural gas in 2023. A recent decision by the Biden administration to pause new export permits for LNG, citing climate concerns, has driven an intense legal fight in the country, with a coalition of Republican-led states arguing that the clampdown is unlawful.
In January, U.S. Energy Secretary Jennifer Granholm said the pause would not affect already-authorized export projects. And it would not immediately affect U.S. supplies to Europe or Asia, she said, since seven LNG terminals are currently in operation, with several more expected to come online in the next few years.
Mr. Ebel has often said Canada isn’t taking full advantage of its abundant supply of natural gas and needs to fix a regulatory system that impedes action, slows development and erodes investor confidence.
Indeed, dreams in British Columbia of becoming a major LNG player have faded. Ten years ago, there were more than 20 proposals in the province to export LNG.
Today, despite much hype, only four B.C. projects are actively seeking to ship LNG to markets in Asia: Cedar LNG in Kitimat; Ksi Lisims LNG on Pearse Island; Woodfibre LNG near Squamish; and FortisBC’s expansion plans at its Tilbury LNG site in Delta.
The Shell-led LNG Canada joint venture in Kitimat is 88-per-cent complete, according to Fluor Corp., which along with JGC Holdings Corp. serves as the project’s prime contractor.
With a report from Reuters
Emma Graney